Balance of payments – commentary
2024 Q2
Simultaneously with the publication of the 2024 Q2 balance of payments figures, revised data for 2024 Q1 and previous quarters of 2017–2023 are being published. The revised data for 2017–2022 follow an extraordinary revision of the national accounts by the CZSO concerning the external sector, reflecting the application of the current methodological procedures and adjustments in the historical time series. The changes are also reflected in the ordinary revision of the data for 2023, which will be further revised in March 2025 in line with the revision policy, especially following an assessment of the annual collection of data on the stocks and flows of foreign direct investment for 2024. The revised data for 2024 Q1 mainly take into account updated CZSO data on exports and imports of goods and services and, on the financial account, data from statements submitted to the CNB by financial and non-financial entities.
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The current account ended 2024 Q2 in a deficit of CZK 3.7 billion. The financial account recorded an outflow of funds (net lending) of CZK 51.4 billion owing to higher growth in external assets than external liabilities. The CNB’s reserve assets fell by CZK 26.5 billion (adjusted for valuation differences). The current account surplus was 1.4% of GDP on an annual basis, and the goods and services surplus was 6.2% of GDP.
Ratio of Current Account and Goods and Services Balance to GDP
(CZK billions, right-hand scale in %)
Note: Indicators calculated on the basis of annual moving aggregates
The goods and services balance recorded a surplus of CZK 152 billion in Q2. The balance improved by CZK 44.3 billion year on year at current prices due to stronger growth in goods exports (index 104.8) compared to a slight rise in imports (index 101.6). The goods balance ended in a surplus of CZK 119.4 billion, up by CZK 36.7 billion from a year earlier. The services balance also showed a surplus (CZK 32.7 billion), representing a year-on-year increase in the surplus of CZK 7.6 billion. This was due mainly to higher exports of transport services and construction work, and lower imports of insurance services. In foreign travel, higher external demand was reflected in a surplus amid a year-on-year increase in exported and imported tourism services. The total goods and services turnover at current prices was up by 4.3% year on year in Q2, amid a rise in exports of CZK 77.1 billion and an increase in imports of CZK 32.9 billion.
The primary income deficit was CZK 137.1 billion in Q2. Its year-on-year increase of CZK 11.7 billion was due mainly to higher dividend payments abroad from direct and portfolio investment. They totalled CZK 161.4 billion, representing a year-on-year increase of CZK 13.5 billion.
Secondary income ended Q2 in a deficit of CZK 18.6 billion (a deterioration of CZK 15.1 billion on a year earlier). The widening of the deficit was due to a worse balance of labour costs in connection with the employment of non-residents in the Czech Republic and Czech residents abroad (payments of taxes, social security contributions and social benefits) and a deficit on net income from the EU budget recorded in the secondary income balance.
The capital account
The capital account ended Q2 in a surplus of CZK 47 billion. The year-on-year decrease in the surplus of CZK 3.5 billion was due to a decline in the surplus on trading in emission allowances and lower income from the EU budget recorded in the capital account.
The financial account
The financial account (including the change in the CNB’s reserve assets) recorded a net outflow (net lending abroad) of CZK 51.4 billion in Q2 owing to external assets increasing more markedly than external liabilities.
Ratio of Financial Account to GDP
(CZK billions, right-hand scale in %)
Note: Indicators calculated on the basis of annual moving aggregates
Foreign direct investment saw a net outflow of funds totalling CZK 24.5 billion. The main factors on the asset side were an increase in the share of reinvested earnings by domestic owners in foreign subsidiaries and the provision of loans to foreign affiliated companies. Liabilities transactions included an increase in the share of reinvested earnings by foreign owners and an increase in equity capital in domestic firms.
Portfolio investment recorded a net outflow (net lending) of CZK 8.6 billion. This was due chiefly to purchases of foreign shares and ownership interests by non-bank domestic investors, which represented an increase in assets of CZK 72.5 billion. Liabilities simultaneously picked up by CZK 63.9 billion due to an increase in the volume of domestic bank bonds held by non-residents.
Derivatives trading recorded an inflow of funds from abroad totalling CZK 15.1 billion.
Other investment saw an outflow (net lending) of CZK 59.9 billion.
This outcome was significantly affected by a rise in the stock of the short-term assets of other sectors (non-financial corporations, financial institutions other than banks, and households) abroad, accompanied by repayment of part of accepted short-term loans. The net outflow of funds abroad was CZK 33.9 billion.
The foreign exchange position of the banking sector (including the CNB) recorded repayment of part of deposits accepted from abroad. The net outflow of funds was CZK 25.4 billion.
The external position of general government recorded a net outflow of CZK 0.6 billion, due to repayment of long-term loans abroad.
The CNB’s own transactions and transactions for CNB clients resulted in a decrease in reserve assets of CZK 26.5 billion (adjusted for valuation differences).